The motion picture industry is touting the $80 million judgment that shut down the popular file-hosting site Hotfile Corp. as the first in which a U.S. court has ruled on whether a so-called “cyberlocker” can be liable for copyright infringement.
Cyberlockers are online sites that offer cloud storage. Two years ago, the motion picture industry began accusing them of assisting in downloading pirated films. Last year, the U.S. Department of Justice shut down popular cyberlocker MegaUpload.com for copyright infringement.
In the suit against Hotfile, several movie studios, including Twentieth Century Fox Film Corp. and Warner Bros. Entertainment Inc., took on one of the most trafficked sites and its principal, Anton Titov.
U.S. District Judge Kathleen Williams of the Southern District of Florida in August denied Hotfile’s summary judgment motion based on the “safe harbor” defense of the Digital Millennium Copyright Act, concluding there was a “staggering” amount of infringement. Williams also refused to dismiss claims that Hotfile or Titov was vicariously liable for infringement. A trial had been scheduled for Dec 9.
The stipulated judgment, announced on Dec. 3, includes a permanent injunction that effectively ordered Hotfile to cease operations.
“This judgment by the court is another important step toward protecting an Internet that works for everyone,” Chris Dodd, chairman and CEO of the Motion Picture Association of America Inc., said in a statement.
Valentin Gurvits of Boston Law Group in Newton Centre, Mass., who represents Hotfile and Titov, did not return a call for comment.
“As a result of a United States federal court having found Hotfile.com to be in violation of copyright law, the site has been permanently shut down,” Hotfile said in a statement on its website. “If you are looking for your favorite movies or TV shows online, there are more ways than ever today to get high quality access to them on legal platforms.”
Hotfile’s demise demonstrates how the studios have shifted from targeting file sharing to cloud storage sites, said Mitch Stoltz, staff attorney at the Electronic Frontier Foundation, which filed an amicus brief supporting Hotfile. The shuttering of the website could also have a practical effect on how cyberlockers do business, he said.
“It may scare them off, it may encourage them to install some sort of filtering, which we think is unfortunate because any sort of automatic content filtering based on some kind of rule about matches to particular copyrighted content doesn’t work very well,” Stoltz said.
Under the stipulated judgment, Hotfile had the option to implement such a filtering system in order to stay in business.
But it was Hotfile’s business method that Williams criticized in her ruling—charging a monthly fee to users while paying them to upload copyrighted films to its site.
“Here, the scale of activity—the notices of infringement and complaints from copyright holders—indicated to Hotfile that a substantial number of blatant repeat infringers made the system a conduit for infringing activity,” the judge wrote. “Yet Hotfile did not act on receipt of DMCA notices and failed to devise any actual policy of dealing with those offenders, even if it publicly asserted otherwise.”
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